A Lesson from Boeing: Ethics Topics in Board Meetings

The Boeing 737 MAX crisis has provided several dramatic lessons for other companies, but a recently amended shareholder lawsuit lays bare the apparent neglect of safety concerns at the board level.  Between the two tragic crashes of the aircraft, the Boeing board, led by its CEO Dennis Muilenburg, focused more on beating back concerns for safety of the aircraft in order not to disrupt aircraft deliveries and cash flow. 

A Wall Street Journal story focuses on emails shortly after the second crash between Arthur Collins, a board member and former CEO at Medtronic PLC, a medical device company, and David Calhoun, another board member who was elected chair at about that time.   Collins tells Calhoun, who has now become Boeing’s CEO, that every Medtronic board meeting began with a discussion of product safety, the risk or ethics topic the company considered most critical.   Calhoun forwarded the email to Muilenburg who then scheduled a discussion of product quality and safety for the next board meeting.  

In this blog, as well as in our book ROTTEN: Why Corporate Misconduct Continues and What to Do About It, my coauthor Marc Epstein and I strongly urge that the board actively monitor the most critical areas of ethics risk.  Knowing that the safety of the flying public was the most fundamental of Boeing’s ethical obligations—and that it would come under constant pressure from executives and managers hesitant to do anything to hold up deliveries of aircraft and limit cash flow—there was no more important topic for close scrutiny by the board.  In this task, the Boeing board and management failed.  

What is your company’s most critical ethics risk that should command priority board time—every meeting?  For a company such as Chipotle, it clearly should be food quality and safety.  For Amazon, it may be employee welfare.  For a nursing home company, it should be resident medical care, particularly in time of pandemic.  For Facebook, it is control of hate and fake speech.  For Exxon Mobil, it should be how the company can negotiate the transition to a carbon-free future—with integrity.  Do each of these companies begin each board meeting with a discussion and update on strategies and progress in their key risk area?  Does yours?